What just happened? Amazon's data collection is now officially under the lens of the EU's Competition Commission, in an investigation that could see it pay a significant chunk of its global turnover if the company is found to have been abusing its relationship with marketplace sellers. Across the ocean, the company recently denied any wrongdoing, but a similar probe from FTC is now more likely than ever.
On Tuesday, news broke that the EU Competition Commission was ready to launch a full-on investigation to look at how the world's largest online retailer might be abusing its position against smaller online sellers that depend on its platform.
Today, Margrethe Vestager has made it official and added a number of comments that detail the main concerns about the company. In her statement, the commissioner promised to take "a very close look at Amazon's business practices and its dual role as marketplace and retailer," underlining the importance of fair competition in e-commerce where an abundance of choice is drawing in a growing number of European consumers.
The investigation will tackle two points of interest, the first of which is the standard agreement between the company and small sellers, who are required to share certain data with Amazon in order to get access to its prominent marketplace.
Another focus will be on how Amazon uses data to select winners for its "Buy Box" feature, which is essentially a flashy button that allows customers to add specific items from them directly to their shopping carts. The European Commission is interested to know how that works for the small guys, especially since the vast majority of transactions are done through that.
To put things in perspective, if Amazon is found to have breached EU competition law, it could face one of the biggest fines yet for a tech company – up to $23 billion, or 10% of its global sales in 2018.
Today's announcement ironically comes just hours after Germany's Federal Cartel Office dropped its seven month investigation into Amazon's business practices, after convincing the company to amend its agreements with small sellers in the country. The tech giant later added it would "cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow."
Yesterday, an Amazon executive told U.S. authorities that it doesn't use any data from third party sellers on its platform to gain an unfair advantage. Instead, it claims it's only using it to tweak its algorithms so that a customer can "make the right purchase regardless of whether it's a seller or Amazon."